Thursday, August 04, 2011

Market comments for August 4th.

Weekly Initial Jobless Claims numbers were released this morning amidst an environment of a negative Futures market. Initial Jobless Claims for July 30th came in at exactly 400K and the previous week's data of 398K was revised to 401K. Continuing claims came in at 3.730 Million.

The Dow Futures was down about 120 before the data was released due to worldwide jitters on economies across Europe and an attempt to lower currencies to increase exports to the US. The US Dollar is rallying against all major currencies today.

Tomorrow we will get the Unemployment data for the month of July. Much of the data is already known, because we have had 4 weeks of 400K claims or more and the only factor in the Unemployment data will be the seasonal adjustments made to it by the government. WE also know about 4000 FAA employees are having to claim unemployment insurance due to Congress not passing legislation before recess to fund the agency. We also know about 70,000 Construction workers had to stop work at airports across the country because of lack of funding by Congress. So if anything is clear, there is a higher chance the unemployment number will go up instead of down or it will remain at least at 9.2%. If seasonal factors have a larger factor than expected, the Unemployment rate could rise to not just 9.3%, but 9.4%. Stay tuned for this important number tomorrow.

It is clear the markets have broken the 200 day MA's as well as broken through previous support levels. Therefore I believe we still have a way to go before a reversal to the upside happens. There just isn't any good news out there right now except higher earnings reported for the second quarter for many companies. But this is hollow news for the average person who is just trying to survive.

Yesterday I sold my TZA Call Options for Oct. (at a Strike price of $41) for $7.00 each. I paid $2.69 and $2.81 for these, just 2 weeks ago. TZA had risen to $44.95/share yesterday for a high, but then closed at $41.02 on very high volume.

The chart below shows the Dow for the past year and I have drawn a support line where I think the Dow must go before a significant bounce up. As you can see it is at 11,500. That will be the first support level which must be tested. So we still have about 350 points to drop on the Dow.

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